Possible changes to liquor regulations concern free market activists

DENVER — An 11th hour effort to unravel a hard-fought bill from 2016, allowing grocery stores and convenience stations to sell full strength malt liquor is being met with much disdain from free market advocates and industry insiders, who say Republican Senator Chris Holbert is abandoning his party’s principles.

“Some of the insiders forget that free market and capitalism, and the ability of customers to choose where they buy their product, competition, are the successful changes of 197,” said John Brackney, a spokesperson for expanded beer sales retailers.

Brackney was referring to Senate Bill 16-197 which passed in 2016 by a margin of 31-4 in the Senate and 57-7 in the House after many heated debates. The bill granted grocery stores and convenience stations the ability to sell full strength beer and other liquors under certain circumstances.

Retail liquor store owners argued it would kill small businesses who couldn’t compete with chains such as King Soopers, Walmart and others.

Proponents argued the 3.2 percent by volume beer was antiquated, but most importantly took choice away from consumers.

“Finally, consumers are going to have whole new choices right in front of them wherever they shop,” Brackney said about the passage of SB 197

After Kansas and Oklahoma passed similar bills last year, Minnesota and Utah are the only two states left in the county that would continue to sell 3.2 beer after Jan. 1, 2019.

All but nine states allow the sale of wine and spirits in grocery and convenience stores.

Under SB 197, grocery stores can sell wine and spirits if they buy two liquor stores in the vicinity of the store. The bill graduates to allow full sale in all grocery stores by 2036.

However, after 18 months of task force meetings that ended with no recommended changes to the 2016 law, Senators Chris Holbert, R-Douglas County and Lucia Guzman, D-Denver, introduced Senate Bill 18-243 in February, which would put more regulations on the industry and repeal some of the original text of SB 197.

That bill cleared both the Senate Veterans and Military Affairs and Appropriations committees this week. It is expected to go to the Senate floor for second reading as early as Friday.

But it didn’t come easy, after nearly four hours of testimony and accusations of impropriety and conflict of interest against the committee Chairwoman Vicki Marble, who owns a liquor store in Fort Collins.

“It’s not just an appearance of impropriety, it is a clear conflict of interest,” Brackney said. “The reason a lot of people don’t like government is this inside protectionist, inside political stuff. And it’s not a secret. The legislators who are voting for it, say they are doing it to protect an industry at the expense of consumers.”

Marble disagreed, saying all legislators have inside knowledge on the industries they work in, that doesn’t make voting on bills inappropriate. She said lobbyists are just mad they are not getting everything they want.

“Jerry Sonnenberg chairs the Ag committee,” Marble said. “He runs and votes on farm bills all the time that benefit farms and water and the trucking industry. Bob Gardner chairs the judiciary committee, he runs bills all the time that benefit his industry. I have never run a liquor store bill. If any bill would benefit me directly or any other legislator, then we will recuse ourselves. It came through my committee, and yes, I voted on it because I happen to know a lot about the industry. They are just mad because I know a lot about the industry.”

The bill makes major changes to SB 197 that some say go against free market principles and are not appropriate after businesses have spent time and money preparing for the new laws.

The changes include:

New licensing requirements.

Limiting shelf space within the stores where product can be sold.

Imposing an age-limit of 21 on employees who can sell the beer.

Limiting sales to 20 percent or less of total sales.

“Many convenience stations are owned by small business people,” Brackney said. “They have a national brand, sure, but most are owned by small businessmen. They’ve had two years to plan, to modify their stores, to order equipment.”

Brackney said he finds it humorous that first the liquor store industry was concerned that all these grocery stores wouldn’t stock much craft beer, now their concerned they’re going to sell too much.”

“So, legislators, including Republicans and so-called conservatives are going to get in there and meddle with shelf space,” Brackney said. “It’s the last couple of inches that hurts the small brewer because if they have to make a choice, they are going to sell the most popular beer and not experiment with the up and coming entrepreneur and their brand-new beer. But the more shelf space you can get the more likely the store is to give that small businessman or woman a shot.”

The shelf space portion of the bill has been removed for now, but if it clears the Senate, it still has to make its way through the House and there is talk it will get put back in. Additionally, raising the selling age to 21 is likely to cost some current employees their jobs and make hiring new employees more difficult.

Currently under state law anyone 18 or over can sell 3.2 packaged beer and can serve beer, wine and spirits in open form in restaurants. Liquor store employees must be 21.

“I think the legislature will do the right thing and let consumers buy where it is most convenient and let craft brewers sell where they want to sell,” Brackney said. “But right how it’s not pretty, this is a really ugly scene, and there should be lots of legislators that are embarrassed by their actions.”

Jon Caldara, president of the Independence Institute* said the bill comes at the expense of the consumers and free market values.

“Once again legislators are working against the core values of economic freedom and limited government in favor of micromanaging the free market and creating barriers to entry for viable business models. All at the expense of consumers,” Caldara said. “There are important issues that the Legislature has yet to consider, like PERA reform and fixing the damn roads. This beer bill is a silly waste of time. If the state is going to micro-manage stores at this level, why not limit the shelve space available for toothpaste too.”

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Author: Sherrie PeifSherrie Peif is an award winning, veteran reporter covering Colorado politics and the 2018 Governor's race. She enjoys baseball, football, the mountains and cooking. She has one child and one husky.